The papillomaviruses induce epithelial lesions in a wide range of vertebrates and over 70 human viral types have been identified. Although these lesions are normally benign, they can progress to malignant carcinomas, such as cervical cancer. The E1 and E2 proteins of the papillomaviruses regulate gene expression and DNA replication of the virus. Because the E1 and E2 proteins have both positive and negative effects on the viral life cycle, a detailed understanding of their regulatory mechanisms is crucial for the design of antiviral drugs and strategies. In the past year, we have determined that the transactivation and DNA binding domains of the BPV-1 E2 transactivator play distinct roles in co-operative binding to the replication origin with the E1 protein. The E2 transactivation domain is necessary and sufficient for interaction with the E1 protein and the E2 DNA binding domain is required for interaction with origin DNA sequences. The function of the DNA binding domain can be replaced by heterologous DNA binding domains from other proteins. By generating conservative amino acid substitutions in residues that are invariant among all papillomavirus E2 proteins, we have identified amino acids in the E2 transactivation domain that are critical for transcriptional activation, for DNA replication, and for interaction with the E1 protein. Several viral genomes that encode mutated E2 proteins that are wild-type for transactivation, replication, and interaction with the E1 protein are defective in cellular transformation, suggesting that the E2 proteins have additional functions that are important for the viral life cycle. We have also discovered thatthe BPV-1 E2 transactivator and repressor proteins use different nuclear localization signals. Both proteins share a common C-terminal DNA binding domain and a basic region within this domain forms an alpha helix that makes direct contact with the DNA target. This basic region functions as a nuclear localization signal, both in the E2 C-terminal domain and in a heterologous protein; however, in the full-length E2 transactivator protein, the C-terminal NLS appears to be masked and a second signal, present in the N-terminal transactivation domain, is used for transport of the transactivator to the nucleus. The use of two different nuclear localization signals could potentially allow differential regulation of the subcellular localization of the E2 proteins at some stage in the viral life cycle.